If the Kroger '1-2-3 Rewards Card' isn't the worst, it's close.

If you’re a shopper in a hurry, and you’re not an expert credit card users, have I got a card for you. The Kroger 1-2-3 Rewards Card is offered by U.S. Bank, and it’s one of the least competitive reward cards I’ve ever seen.

In case you don’t know, Kroger is a very large grocery chain that includes brands such as King Soopers, Ralph’s, Smith’s, Fred Meyer, and others. So it’s no surprise it has its own credit card. The surprise is just how awful it is.

Even if you never apply for this card, there’s a lot to be learned here. Here is what you should look for in a credit card, and which the Kroger 1-2-3 card just doesn’t offer…

A competitive sign-up bonus

Nearly all reward credit cards will feature a sign-up bonus, to give you a reason to give their products a try. For example, the Barclaycard Arrival Plus currently offers new applicants 50,000 miles (worth $500 in travel statement credits) after they make $3,000 in purchases within 90 days of opening a new account. On the other hand, the Kroger card has no sign-up bonus.

A clearly defined rewards program

The Kroger card offers three points per dollar spent on the Kroger family of brands, double points for other purchases from Kroger stores, and one point per dollar spent on all other purchases. This sounds great, but it’s not clear how much these points are worth.

In fact, you need to redeem 1,000 points just to earn $5 in free groceries, so points are worth a mere half-cent each! Alternatively, you could consider the Discover it card, which offers cash-back rewards that can be redeemed for actual cash, with no gimmicks.

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Competitive value

Since Kroger’s points are worth just one half of a cent each, it means:

  • purchases of Kroger’s generic goods return just 1.5 percent back in rewards
  • other Kroger purchases return only 1 percent back
  • everything else offers a measly 0.5 percent back

Plus, these rewards are not cash back. They’re in the form of store credit towards future purchases. Alternatively, Citi’s Double Cash card offers you up to 2 percent cash back on all purchases, 1 percent when you make the purchase, and another 1 percent when you pay for it.

This is far better than the Kroger card. Furthermore, the American Express Blue Cash Preferred offers a whopping 6 percent cash back on up to $6,000 spent each year on all grocery store purchases (not just from Kroger stores), although it does have an annual fee.

Low fees

The Kroger card has no annual fee, but it charges high fees in other areas. For example, it has a balance transfer fee of 4 percent, where most cards only charge 3 percent. Cash advance and ATM withdrawal fees are also 4 percent with a $10 minimum. It also has a 2.8 percent foreign transaction fee, although many cards now have no fee at all on these charges. In contrast, the PenFed Promise card has no fees at all.

So what should you do?

Obviously, you should ignore this card during your next trip to the grocery store. And when you see offers for other retail credit cards, you should take an application home, do your research, and make sure it has everything a reward credit card should have before you apply.

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Article last modified on August 14, 2017. Published by Debt.com, LLC .